Above the Fold 05.05.09

Who’s your daddy?…Calif. auditor leery of her calculator…”ATTENTION VIRGINIA I have your sh**!”…Union jacks getting upset in California…The death knell for public education?…Newark makes gains to be slightly more safe than Somalia…11th hour tomfoolery in Colorado…$1 billion in broadband may go out west…Feliz Cinco de Mayo!

USA Today reports for the first time ever, the federal government has supplanted sales, property and income taxes as the biggest source of revenue for state and local governments. It only took three months to wipe out the number one source of state and local revenue since the mid-1970s – sales tax – according to the Bureau of Economic Analysis. “This has more to say about the severity of the recession than anything else,” Nick Johnson, of the Center on Budget and Policy Priorities, says. “Congress stepped in on a temporary basis to help states.” States are hoping that tax collections rebound by 2012, just in time for the last of the stimulus dollars.

California’s Auditor says the state system responsible for handling federal stimulus money is at a “high risk” of making errors, Capitol Weekly reports. Elain Howle has indicated that internal control problems at some state agencies, including the Dept. of Social Services, Dept. of Health Care Services and the Employment Development Department, will add to the challenge of tracking billions of dollars. Ms. Howle will conduct a detailed risk assessment of fourteen state departments, at least $50 billion of which will pass through those agencies. “We’ve been working together on this, and she’s developing a matrix of all the departments. We will know which programs will be at most risk,” said Alyson Huber, D-Lodi, the chairwoman of the Audit Committee.

Last week, CivSource’s Above the Fold reported on a Richmond Times-Dispatch story about a breach in Virginia’s Health Department computer system. At the time, no one would confirm for sure there had been a breach. Well, thanks to WikiLeaks, it seems someone hacked the system and demanded $10 million in return for more than 8 million patient records. The note reads: “ATTENTION VIRGINIA I have your sh**! In *my* possession, right now, are 8,257,378 patient records and a total of 35,548,087 prescriptions. Also, I made an encrypted backup and deleted the original. Unfortunately for Virginia, their backups seem to have gone missing, too. Uhoh :(” Read further by clicking on the Washington Post blog and InformationWeek coverage.

Republicans blocked a labor contract for 95,000 state government employees Monday that would have restored half of a monthly cut, the Los Angeles Times reports. The state cut state employee pay to cover a $42 billion budget gap, but Assembly GOP said restoring that pay would have been irresponsible given the state’s ongoing fiscal problems. Union member officials expressed disbelief as the votes rolled in. “We negotiated this contract with the governor in good faith to help close the budget shortfall. More than 90% of our members voted to ratify this agreement,” said Yvonne Walker, Local 1000 president.

Education Secretary Arne Duncan says the Recovery Act is a “historic opportunity” to jump-start reforms that “will transform public education in America,” USA Today reports. The Recovery Act will begin doling out $100 billion to needy public schools, but some observers are worried that two years is not enough time to impliment real educational reform. “If you were trying to set the system up to look bad, one good way to do it is to throw an awful lot of money at it — money it can’t possibly absorb in two years — and then expect that you’re going to see changes in student achievement,” says David Shreve of the National Conference of State Legislatures. Amy Wilkins of the Education Trust says this money will put public education in a do-or-die scenario. “If the education community doesn’t deliver change with this money, this becomes ‘TARP for Public Schools’ — and that’s a huge danger. The next time we go hat in hand, it’s going to be awfully hard to justify another investment.”

BusinessWeek blogger Spencer Ante reports that “a variety of cutting-edge technologies” has helped Newark, New Jersey slash its violet crime rate for the first four months of 2009. A new computer that can detect where gunshots originate and a crime tracking program called CompStat are a few of the new gadgets police in the city are using. “Mayor Booker’s growing success at battling crime is an impressive feat, one that should help the city’s turnaround when the economy begins to improve,” Ante says.

Some 11th hour tomfoolery has left a plan to repeal Colorado’s death penalty in jeopardy, the Denver Post reports. HB 1274 would have ended capital punishment in the state and diverted the $900,000 budget to form a cold-case team, but a new amendment would send that money out to local authorities around the state instead – a move that will spread the money too thin, say some original supporters of the bill. Sponsor Sen. Morgan Carroll, D-Aurora, says, “Some people are looking for ways to avoid voting on the core issue. This is a totally different bill that’s not had a public hearing. It’s gamesmanship that makes a mess of public policy.”

The state of California is looking to land a billion dollars to help increase the number of broadband connections, the Sacramento Bee reports. “The importance of closing that gap is almost incalculable,” said Sunne Wright McPeak, president and CEO of the California Emerging Technology Fund (CETF), a nonprofit underwritten by four merged phone companies to oversee one effort to expand the use of broadband. The CETF has worked in conjunction with the California Public Utilities Commission and the California Advanced Services Fund to bring high-speed Internet to rural communities in recent years, so officials are hopeful they’ll be eligible for stimulus funds. See how Texas is looking to capitalize on broadband funds, and understand the complexities still facing the $7.2 billion broadband purse in last week’s, “Texas broadband RFI could prove problematic.”